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Hyduke Energy Services Inc. announces a 35% increase in revenue for the three months ended June 30, 2008 over the previous quarter and a return to quarterly profitability

EDMONTON, Aug. 14 /CNW/ - Hyduke Energy Services Inc. (HYD - TSX),
announced operating results for the three and six months ended June 30, 2008.
A summary of those results is as follows:
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Selected Income
Statement Information Three Months Ended Six Months Ended
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($000's except per June 30, March 31, June 30, June 30, June 30,
share data) 2008 2008 2007 2008 2007
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Revenue 15,947 11,813 18,672 27,761 38,992
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Gross margin(1) 2,385 1,515 3,920 3,900 7,650
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Gross margin (%) 15.0% 12.8% 21.0% 14.0% 19.6%
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EBITDAS(1) 900 30 2,816 930 5,247
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Net income (loss) 287 (336) 1,331 (49) 2,567
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Earnings (loss)
per share - basic ($) 0.013 (0.015) 0.061 (0.002) 0.117
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Earnings (loss) per
share -diluted ($) 0.013 (0.015) 0.061 (0.002) 0.117
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Selected Balance Sheet Information As At
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June 30, December 31, December 31,
($000's, except ratios) 2008 2007 2006
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Total assets 51,344 48,552 57,802
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Total long-term debt 2,325 2,414 2,933
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Total shareholders' equity 36,340 36,266 33,757
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Current ratio (current assets
divided by current
liabilities) 2.81 to 1.00 3.39 to 1.00 2.01 to 1.00
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Debt to equity ratio
(long-term debt divided
by shareholders' equity) 0.06 to 1.00 0.07 to 1.00 0.09 to 1.00
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(1) The Company uses certain non-GAAP measures as indicators of financial
performance and believes that these non-GAAP measures provide useful
supplemental information to investors. EBITDAS and gross margin are
measures used by the Company that do not have a standardized meaning
prescribed by GAAP. The Company's method of calculating EBITDAS and
gross margin may differ from other companies and may not be
comparable to similar measures presented by other companies.
EBITDAS is defined as earnings before interest, taxes, depreciation
and amortization, gain or loss on sale of property, plant and
equipment, gain or loss on foreign exchange, and stock-based
compensation. Management believes that in addition to net income,
EBITDAS is a useful supplemental measure as it provides an indication
of the operating cash flow generated by the Company's principal
business activities. EBITDAS is not intended to represent an
alternative to net income determined in accordance with GAAP as an
indicator of the Company's performance.
Gross margin is defined as revenue less cost of sales. Cost of sales
include direct materials, direct labor, variable and fixed
manufacturing overhead, and other costs closely associated with the
manufacture of goods and the provision of services.
Continued success in developing international markets combined with
improving drilling and well service activity levels in Western Canada have
resulted in a significant increase in revenue for the three months ended June
30, 2008, compared to the previous quarter. Revenues of $15.9 million for the
three months ended June 30, 2008, represents an increase of 35% or
$4.1 million over the previous quarter (i.e. three months ended
March 31, 2008). On a year-over-year basis, revenues have decreased over the
comparative periods due to the slowdown in new equipment investment in Western
Canada and the weakness in drilling and well service activity experienced
beginning in mid-2007. For the three months ended June 30, 2008, revenue has
decreased 15% or $2.7 million over the same period in 2007. For the six months
ended June 30, 2008, revenues of $27.8 million represents a decrease of 29% or
$11.2 million over the same period in 2007.
Gross margin of $2.4 million for the three months ended June 30, 2008,
represents an increase of 57% or $0.9 million over the previous quarter (i.e.
three months ended March 31, 2008) and is due to increased revenue levels and
an improvement in gross margin percentage from 12.8% to 15%. On a
year-over-year basis, reduced gross margins are due primarily to reduced
revenue levels and reduced gross margin percentages are due to continued
competitive pricing during the Western Canadian slowdown. For the three months
ended June 30, 2008, gross margin has decreased $1.5 million or 39% over the
same period in 2007. Gross margin percentage of 15.0% for the three months
ended June 30, 2008 represents a decrease of 29% over the gross margin
percentage of 21.0% for the same period in 2007. For the six months ended June
30, 2008, gross margin of $3.9 million represents a decrease of $3.8 million
or 49% over the same period in 2007. Gross margin percentage of 14.0% for the
six months ended June 30, 2008, represents a decrease of 29% over the gross
margin percentage of 19.6% for the same period in 2007.
EBITDAS of $0.9 million for the three months ended June 30, 2008,
represents an increase of 2,900% or $0.87 million over the previous quarter
(i.e. three months ended March 31, 2008). On a year-over-year basis, EBITDAS
has decreased $1.9 million or 68% for the three months ended June 30, 2008,
and has decreased $4.3 million or 82% for the six months ended June 30, 2008.
Net income of $0.3 million or $0,013 per share for the three months ended
June 30, 2008, represents an increase of 185% or $0.6 million over the
previous quarter (i.e. three months ended March 31, 2008). On a year-over-year
basis, net income has decreased $1.0 million or 78% for the three months ended
June 30, 2008, and has decreased $2.5 million or 99% for the six months ended
June 30, 2008.
Hyduke continues to remain in a strong financial position. The Company's
current ratio is a healthy 2.81 to 1.00 and debt to equity ratio is negligible
at 0.06 to 1.00. This balance sheet strength will allow Hyduke to not only
weather the short-term storm of reduced Western Canadian activity, it will
allow Hyduke to capitalize on acquisition and growth opportunities as they
arise.
OUTLOOK
Industry expectations for the remainder of 2008 reflect some renewed
optimism in overall industry activity in Western Canada as measured by the
number of wells drilled. The Canadian Association of Oilwell Drilling
Contractors (CAODC) have revised upwards their forecast of the number of wells
drilled (on a completion basis) for 2008 to be 18,000 and an average rig
utilization of 42% for the year. The Petroleum Services Association of Canada
(PSAC) have revised upwards their forecast of the number of wells drilled (on
rig released basis) to be 16,500 which represents an 11% decrease over 2007
activity.
While it is expected that new rig builds for use in Western Canada during
2008 will be limited, management believes that continued success and
penetration into international markets will help to offset the domestic
Turn-Key Equipment slowdown. Hyduke continues to actively market its products
and services to international markets in the Russian Federation, India, South
America, North Africa, Middle East, Asia-Pacific and Latin America. While the
project decision making cycle is longer on international work, active quoting
continues on a significant number of international opportunities. Over the
past three years, Hyduke's international revenues have approximated 20% of
total revenue and it is expected that the volume and proportion of
international revenue will increase as additional international opportunities
are secured.
The reduced levels of industry activity forecast for 2008 are also
anticipated to impact Hyduke's Life Cycle Management businesses such as repair
and maintenance, inspections and certification, and consumables. These
activity-based businesses comprise approximately 50% of overall Hyduke
revenue, are less reliant on capital spending and business activity levels
generally trend along with drilling and well service activity. There is a
continued focus on increasing market share through marketing Hyduke's Life
Cycle Management and Single Source Supplier platforms to customers. These
platforms benefit customers by offering continued support throughout the
useful life of their equipment and by offering a wide array of consistent,
reliable services from a single source.
Management is prepared for challenging conditions for the remainder of
2008. We are very actively developing markets outside of Western Canada and
expect to build upon our historical successes. Operationally, we continue to
focus on cost control, realizing on vertical integration opportunities and
prudent cash management and investment. Hyduke's strong financial position
will be a factor is protecting the Company from a prolonged downturn as well
as allow the Company to capitalize on growth opportunities as they arise.
Hyduke continues to be confident that its strategic plan considers
current and expected market conditions and that strategic growth will continue
to be achieved through increased products and services and increased
penetration into international markets.
Forward-Looking Statements
This report contains certain forward-looking statements relating, but not
limited to, operations, anticipated financial performance, business prospects
and strategies of Hyduke. Forward-looking information typically contains
statements with words such as "anticipate", "believe", "estimate", "expect",
"plan", "intend" or similar words suggesting future outcomes or outlooks on,
without limitation, estimates of business activity, supply and demand for the
Company's products, the estimated amounts and timing of capital expenditures,
anticipated future debt levels, or other expectations, beliefs, plans,
objectives, assumptions or statements about future events or performance.
Readers are cautioned not to place undue reliance on forward-looking
information. By its nature, forward-looking information involves numerous
assumptions, inherent risks and uncertainties both general and specific that
may cause actual future results to differ materially from those contemplated
and contribute to the possibility that the predictions, forecasts, projections
and other forward-looking statements will not occur. These factors may affect
anticipated earnings or assets and include, but are not limited to: industry
activity levels, market liquidity, customer credit risk, competition, oil and
gas prices, product liability, fixed price contracts, development of new
products, uninsured and underinsured losses, access to additional financing,
source of supply of raw material and third party components, availability of
key personnel, agreements and contracts, government regulations, foreign
exchange exposure, interest rate risk, international scope of operations,
environmental health and safety regulations and Hyduke's anticipation of and
success in managing the risks implied by the foregoing. The Company cautions
that the foregoing list of important factors is not exhaustive. Hyduke
undertakes no obligation to update publicly or otherwise revise any
forward-looking information, whether as a result of new information, future
events or otherwise, except as required pursuant to applicable securities
legislation.
About Hyduke
Hyduke is an integrated oilfield services company with over thirty years
experience in the manufacture, repair and distribution of oilfield equipment
and supplies in Canada and worldwide. Hyduke specializes in providing
customized, integrated solutions to the drilling and well service industries
including:
- Turn-Key Equipment - drilling rig and service rig packages including
in-house design, engineering and drafting, major component
procurement and overall project management;
- Life Cycle Management - inspection, certification, service, repair
and supply services throughout the operating life of the drilling or
well service rig; and
- Single Source Supply - providing new capital equipment, repair and
maintenance on existing capital equipment and supply of operating
consumables.
Hyduke is headquartered in Nisku, Alberta and has facilities in Edmonton,
Calgary, Nisku, Leduc, Red Deer and Lloydminster, Alberta.
Hyduke operates in three operating segments. The Drilling Equipment
segment includes manufacture and repair of land based drilling rigs and
drilling rig structures, supply and repair of drilling rig equipment,
procurement and distribution of drilling supplies, supply and service of
pneumatic controls, engineering and design of drilling rigs and inspection and
certification of drilling rig equipment. The Well Service Equipment segment
includes manufacture and repair of well service rigs, mobile and skid mounted
pump units and other well service equipment, procurement and distribution of
well servicing supplies, supply and service of pneumatic controls, engineering
and design of well service rigs and inspection and certification of well
service equipment. The Other Oilfield Services segment includes manufacture
and distribution of cased hole and overburden drill bits and drilling systems,
custom and production machining services, distribution and repair of
truck-mounted equipment including cranes, winches and dump boxes and
industrial sandblasting, painting and collision repair.
The TSX has not reviewed and does not accept responsibility for the
adequacy or accuracy of this News Release.
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